Illinois Association of Realtors Illinois Bankers Association TILA/RESPA Integration Rule: Using the New Loan Estimate New Closing Disclosure

Transcription

1 Illinois Association of Realtors Illinois Bankers Association TILA/RESPA Integration Rule: Using the New Loan Estimate New Closing Disclosure May 4, 2015 Leonard A. Bernstein Philadelphia, PA

2 SCOPE TILA/RESPA INTEGRATION Effective Date: New TILA/RESPA integration disclosures for all applications received on or after August 1, Two Tier Operations: Existing disclosures for pre 8/1/15 app s that close anytime thereafter. Cannot use new disclosure for pre 8/1/15 apps. Covered Loans: New TILA/RESPA integration disclosures apply to all closed end consumer credit transactions secured by real property (except reverse mortgages). Construction only, vacant land or > 25 acres NO LONGER EXEMPT Old Forms Replaced: For covered loans on and after the effective date, no Good Faith Estimate; no old TILA forms New Forms: For covered loans, old forms replaced by LOAN ESTIMATE and CLOSING DISCLOSURE. 2

3 TIMING LOAN ESTIMATE KEY DEFINITIONS: Application : Submission of Name Income Social security number (to obtain credit report) Property address Property value estimate Mortgage loan amount sought * No longer includes catchall: any other information deemed necessary * Can be written or electronic format/written record of an oral app * Systems need to change 3

4 TIMING LOAN ESTIMATE Business Day - generally the rescission definition of every day except Sunday and enumerated federal holidays; EXCEPT days open definition for: LOAN ESTIMATE DELIVERY 3 business day period after receipt of application: days open for business. EXPIRATION OF LOAN ESTIMATE 10 business day period after Loan Estimate provided ( days open ). Days open open to the public for substantially all of its business functions Saturdays? 4

5 TIMING LOAN ESTIMATE Delivery of Loan Estimate (and Special Information Booklet for purchase transactions) 3 business days after receipt of application ( days open ) Not later than 7 business days before consummation ( rescission ) Deemed received 3 business days after mailing ( rescission ) Waiver of pre-consummation 7 business day period: bona fide personal financial emergency i.e. foreclosure sale If within 3 business days creditor rejects or application withdrawn, no Loan Estimate Cannot condition providing loan estimate on consumer submitting verification documents Can Loan Estimate go before all 6 application items received? 5

6 LOAN ESTIMATE CREDITOR OR BROKER Creditor responsible to deliver If mortgage broker, either may deliver BUT creditor responsible for any errors or defects: for compliance Mortgage broker subject to recordkeeping - 3 years for Loan Estimate Need to communicate with brokers 6

7 LOAN ESTIMATE WRITTEN LIST OF PROVIDERS Shopping Identify settlement services (if any) for which consumer may shop (eligible for 10% good faith tolerance) Separate disclosure written list of providers must accompany Loan Estimate; at least one provider for each service; with contact info; must accompany Loan Estimate. Statement may choose another provider (but good faith flexibility for lender) Affiliates May be included, but follow RESPA AfBA rule. Loan Estimate Providers on written list must correspond to Settlement Services can shop for on Loan Estimate 7

8 H-27(B) SAMPLE OF WRITTEN LIST OF PROVIDERS 8

9 EARLY WRITTEN ESTIMATE: MARKETING New disclosure requirement If written estimate specific to the consumer provided before receipt of Loan Estimate, a clear notice must appear at top of first page; at least 12 point font Appendix H-26: Your actual rate, payment and costs could be higher. Get an official Loan Estimate before choosing a loan. May not have headings substantially similar to Loan Estimate 9

10 EARLY WRITTEN ESTIMATE: PREAPPROVALS CFPB: TRID not intended to prohibit preapprovals or prequalifications. Early Written Estimate useful for prequalifications. May strategically collect information so that not collecting all six elements of an Application. May run a credit report and collect credit report fee May collect information from consumer, BUT may not require consumers to submit documents verifying information prior to consumer receiving the Loan Estimate. 10

11 FEE LIMITATIONS No fee imposition until consumer s receipt of Loan Estimate and indication of intent to proceed Creditor can define manner of communication of intent Recordkeeping requirements apply to communication of intent Exception: Creditor or broker can impose bona fide and reasonable credit report fee before receipt of Loan Estimate Cannot take method for payment in advance No obtaining credit card number No holding of check 11

12 Good Faith Limits on Changes in Fees Good Faith General Rule: Charge imposed at closing may not exceed that disclosed in the Loan Estimate. Zero Tolerance Fees to creditor, broker, affiliate Unaffiliated 3rd party fees not allowed to shop Transfer taxes. 10 Percent Rule Good Faith Tolerance: (1) Recording fees; and (2) Aggregate of third party charges paid by consumer; Such third party charges not paid to affiliate or creditor, and Consumer permitted to shop for such third party charge and selects provider from written list. Other Variations Permitted: (only if based on best info available) Prepaid interest; property insurance; amounts in escrow; Can charge less than $$ on Loan Estimate Charges paid for 3 rd party service providers not required by creditor If creditor permits consumer to shop and consumer selects 3 rd party provider not on written list 12

13 Good Faith Revised Loan Estimate May send revised Loan Estimate only if increase exceeding good faith is caused by: Changed Circumstances re settlement charges extraordinary event, information inaccurate or changed, or new information not relied on Changed Circumstances affecting eligibility change impacts creditworthiness or value of security which increases fee (one becomes unemployed) Revisions requested by consumer Floating rate no later than three business days after the rate is locked, shall provide revised Loan Estimate with revised rate, points, lender credits and other interest rate dependent charges. Expiration intent to proceed not received after 10 business days ( days open ) Construction If settlement will occur more than 60 days after Loan Estimate, and if Loan Estimate reserves the right to send revision; place in Other Considerations Keep records of changed circumstances 13

14 Good Faith Revised Loan Estimate Timing of Revised Loan Estimate Within 3 business days of receiving info ( days open for business definition) Not after delivery of Closing Disclosure Not later than 4 business days prior to consummation ( rescission ) (if by mail, 7 business days before consummation) Changed Circumstances later than 4 business days before closing: if between 4 th & 3 rd business day before, insert revised charges on Closing Disclosure if after first Closing Disclosure (within waiting period), put revised charges on Closing Disclosure given at consummation, and compare to prior Closing Disclosure 14

15 LOAN ESTIMATE General Rules Reflect Legal Obligation best information available Clear and conspicuous; segregated; MUST USE FORM H-24 if federally related ; model if not Estimates may label if exact info is unknown, i.e. not reasonably available; IF H-24 USES ESTIMATE MUST USE N/A use if a disclosure inapplicable, or can leave blank Rounding rules generally use 2 or 3 decimals unless rounding required; periodic mortgage insurance must be rounded; dollar amounts rounded to nearest whole dollar Spanish language Form H-28 15

16 H-24(B) Mortgage Loan Transaction Loan Estimate - Fixed Rate Loan Sample-pg 1 16

17 LOAN ESTIMATE General Information Section Creditor if mortgage broker delivering and creditor not known, leave blank; can use logo if does not exceed space Sale Price for a refinance, use estimated property value Can use information from the applicant or own estimate If creditor has an appraisal, value to be used in underwriting is disclosed Loan Term if uneven, use, for example 15 yr, 5 mo If less than 24 months use 16 mo for example If unknown, state possible range, including the maximum Purpose Purchase, Refinance, Construction, Home Equity Applicants if multiple, list each Property always use a zip code 17

18 LOAN ESTIMATE General Information Section Product both the product, and payment change feature (see p. 24) Products: Fixed Rate Adjustable Rate Step Rate For ARM and Step Rate, precede Product name with introductory rate duration and frequency of first adjustment period Example: 5/3 Adjustable Rate If no introductory rate: 0/3 Adjustable Rate ; if unknown, the shortest potential Payment Change Features: Negative Amortization Interest Only Step Payment Balloon Payment Payment change feature precedes disclosure of product Precede feature with its duration: i.e. 5 Year Interest Only, 5/3 Adjustable Rate For balloon payment, year due, i.e. Year 7 Balloon Payment, Fixed Rate If more than one feature, only disclose first applicable Uneven Periods: more than 24 months, use decimals, i.e. 2.5/1 Adjustable Rate ; less than 24, use months, i.e. 18mo. 18

19 LOAN ESTIMATE General Information Section Loan Type Conventional FHA VA Other for state guaranteed loans and other federal programs Need short description: i.e. US DA Rural Housing Service - RHS Loan Identification Number Determined by creditor; must be unique to the specific loan Rate Lock If locked, disclose the time that lock expires w time zone (i.e. EST ) Expiration of Loan Estimate disclose whether or not rate is locked 19

20 H-24(B) Mortgage Loan Transaction Loan Estimate - Fixed Rate Loan Sample- pg 1 20

25 H-24(C) Mortgage Loan Transaction Loan Estimate - Interest Only Adjustable Rate Loan- pg 1 25

26 LOAN ESTIMATE Loan Terms (see p. 24) Loan Amount If may increase: Disclose maximum principal balance, and last payment that causes loan amount to increase, and whether potential or scheduled: [Can] go as high as $ Can increase until year Interest Rate at consummation For ARM s, if interest rate at consummation not known at time of Loan Estimate, use fully indexed rate in effect at time of disclosures. If may increase, disclose: Frequency and first adjust date: Adjusts every starting in Maximum rate and date reached: Can go as high as in year If loan term increase because of rate: Can increase loan term to Reference to AP table 26

27 LOAN ESTIMATE Loan Terms (see p. 24) Principal & Interest Frequency inserted before i.e. monthly Bi-Weekly If initial rate unknown, current fully indexed rate determines payment If may increase; disclose: Frequency and first adjust date: Adjusts every starting in Maximum payment and date reached: Can go as high as in year If interest only period: Includes interest only and no principal until Reference to AP table 27

28 LOAN ESTIMATE Loan Terms Prepayment Penalty if yes, disclose maximum amount and date no longer imposed: As high as $ if you pay off the loan during the first 2 years. Includes: monthly interest accrual amortization calculation method if full month of interest is assessed upon prepayment fee that is waived on condition that consumer does not prepay (but see below) minimum finance charge in simple interest deal refund of unearned interest by method less favorable than actuarial method portion of unearned pre computed FC will not be rebated Does not include: pay off fees uniformly charged Loan guarantee fees Waived bona fide third party fees imposed if loan prepaid sooner than 36 mo 28

29 LOAN ESTIMATE Loan Terms Balloon Payment : more than 2 times regular payment; Loans with only 1 or 2 payments are balloons If yes, disclose maximum amount and due date: You will have to pay $ at the end of year. 29

31 LOAN ESTIMATES Projected Payments (see p. 29) Column for each separate periodic payment or range First column initial payment, and additional columns for triggering events : P&I changes (including end of only interest period disclosed as such) Scheduled balloon payment (balloon should be range if ARM) Automatic termination of MI or functional equivalent If multiple P&I changes in a single year, use anniversary date for column Max number columns 4 If loan has more than 4 triggering events, show range of payments reflecting all periodic payments Balloon always last column, and that may compress other columns; range of payments shown in third column MI termination only disclosed as separate column if column available Range of P&I use for ARM s; multiple events in single column Min & max using rounded dollar amounts 31

32 LOAN ESTIMATE Projected Payments (see p. 29) ROW 1 - Principal & interest only interest language for interest only initial payment period ARM s use range of payment from maximum possible increases and minimum increase ROW 2 Mortgage Insurance Whether or not escrowed If not required 0 ; if terminated - ROW 3 Estimated Escrow Year Subheadings mid year event assumed next year For fixed rate 10 years 4 months use Years 1-11 If not established, 0 ; if to be closed, use 32

33 LOAN ESTIMATES Projected Payments (see p. 29) Estimated Taxes, Insurance & Assessments Scope: Property taxes, property insurance, credit life, debt cancellation, condo/homeowners assessments, flood insurance Sum of monthly cost Listing of Other costs if more than one in other, identify one and add and additional costs Paid from escrow if more than one in other and only some will be paid be creditor from escrow, for In escrow can disclose some. 33

34 LOAN ESTIMATE Costs at Closing (see p. 29) Bottom of page 1 Estimated Closing Costs derived from page 2 subtotals for Loan Costs, Other Costs minus Lender Credits Estimated Cash to Close derived from page 2 schedule For transactions without a seller, can add checkbox indicating from or to borrower see page 52 34

36 CLOSING COST DETAILS LOAN COSTS (see p. 34) Origination Charges Dollar amounts rounded to nearest dollar; % to 2 or 3 decimals. Indirect compensation of loan originator by creditor NOT shown Origination: includes app fee, orig fee, underwriting fee, processing fee, rate-lock fee, verification fee, mortgage broker fee, loan level pricing adjustment passed on to consumer (escrow waiver) Must include % of Loan Amount (Points) and leave blank if 0;. Cannot exceed 13 itemized charges. Points must be listed first, all others listed in alphabetical order Clear and conspicuous standard applies 36

37 CLOSING COST DETAILS LOAN COSTS: Services You Cannot Shop For; Services You Can Shop For (see page 34) CANNOT SHOP: Fees creditor requires for services by specified third parties CANNOT SHOP: Examples: appraisal, credit report, flood determination, gov funding, homeowner s association certification, lender s attorney fee, subordination fee, title-closing protection, titlelender s policy, up front MI Lender title policy cost disclosed without adjustment for simultaneous owner s policy CANNOT SHOP: Cannot exceed 13 itemized items; alphabetical order CAN SHOP: Examples: Pest inspection, survey, title CAN SHOP: Cannot exceed 14 itemized items 37

39 CLOSING COST DETAILS OTHER COSTS: Taxes and Other Government Fees (see page 37) In general, for all Other Costs, disclose all charges required by agreement of sale to the extent creditor has knowledge Recording fees any other government fees not transfer taxes are aggregated with recording fees. Transfer taxes only portion imposed on consumer; portion imposed on seller not for Loan Estimate any fees based on loan amount or sale price no matter the name use apportionment provided by law or common practice if without agreement of sale Taxes and Other Governmental Fees cannot delete categories; cannot add more subheadings. 39

40 CLOSING COST DETAILS OTHER COSTS: Prepaids (see page 37) Prepaids Use precise language of model form; if no charge for a category, leave blank. Flood insurance premiums another example Prepaid interest: rate disclosed same as interest rate page 1 Cannot delete subcategories; if not charged leave blank Maximum 3 additional subcategories can be added with time period and total 40

41 CLOSING COST DETAILS OTHER COSTS: Initial Escrow Payment at Closing (see page 37) Use precise language of model form; if no charge for a category, leave blank. Need monthly amount and number of months collected. Aggregate account adjustment not included in Loan Estimate If different time frames for 2 property taxes, i.e. general and school, can add another category. Maximum of 5 additional items permitted. 41

42 CLOSING COST DETAILS OTHER COSTS: Other (see page 37) Amounts consumer likely to pay not required by creditor Example: Title Owner s Title Policy (optional) More examples: credit life, appliance warranties, real estate broker commissions, inspection fee not required by creditor. Indicate (optional) for separate insurance or warranty products. 42

43 CLOSING COST DETAILS TOTAL CLOSING COSTS Lender Credits (see page 54) List as a negative number or leave blank (last line) Defined: Sum of payments from creditor to consumer for both non-specific overall credit and for specific fees no cost loans cost of all fees shown as a lender credit If creditor represents that all or part of fees will not be paid, the lender credit must be sufficient to cover that sum Good Faith : if Closing Disclosure Lender Credit is less than that disclosed in the Loan Estimate, that is increased charge: An increased lender credit to cover an increased cost complies A decreased lender credit to cover decreased cost violates good faith 43

44 CLOSING COST DETAILS CALCULATING CASH TO CLOSE (see page 37) Total Closing Costs minus closing costs paid out of loan proceeds Downpayment: purchase price minus principal; other: subtract principal from debt satisfied (if negative or $, disclose 0 ) Deposit: negative number Funds for Borrower only for loans not for purchase; for purchase 0 Formula: Satisfied debt minus principal loan amount: if answer is positive, disclose $0 in Funds from Borrower if answer is negative, disclose that number in Funds For Borrower Seller Credits disclose as negative number Adjustments and Other Credits disclosed as a negative no. Gifts from family members; Home builder or developer providing a credit Proceeds of subordinate funding good faith standard inquire to borrower, review sales contract amounts to be paid at closing by consumer under agreement of sale Estimated Cash to Close all lines show negative number except first and Down Payment 44

45 CLOSING COST DETAILS ALTERNATIVE CALCULATING CASH TO CLOSE Refinance/Home Equity Option (see page 54) Optional, simpler format. If use, also use optional format at bottom of page 1 Estimated Cash to Close. (see page 52) Loan Amount, minus Total Closing Costs minus Estimated Total Payoffs and Payments Estimated Total Payoffs and Payments amount to be paid to 3 rd parties not otherwise disclosed; i.e. payoffs of existing liens, judgments, outstanding debts required to be paid. Use check box to disclose if Estimated Cash to Close due from or to be paid to borrower Estimated Closing Costs Financed Loan Amount minus Payoffs and Payments, only to extent greater than zero and less than or equal to Total Closing Costs 45

46 CLOSING COST DETAILS Adjustable Payment (AP)Table (see page 34) Only appears if payment can change not based on rate, such as an interest-only feature; seasonal payment, optional payment (biweekly) or step payment. Principal and Interest Payments: First change date and amount/range; subsequent change dates; and maximum payment amount and date. 46

47 CLOSING COST DETAILS Adjustable Interest Rate (AIR) Table (see page 37) Use only when rate may increase either based on an index or scheduled changes. Index and margin, initial interest rate, min/max, first change date and subsequent, limits on rate changes Can abbreviate index: LIBOR If no contractual maximum, state usury rate. 47

50 ADDITIONAL INFORMATION; Other Considerations (see pages 47, 48) Lender/Broker contact info and NMLS numbers Comparisons 5-year total, APR and Total Interest Percentage (TIP) Appraisal takes the place of Reg B appraisal disclosure Reg B right to prompt copy only covers 1 st lien loans Homeowner s Insurance optional disclosure, but satisfies requirement for excluding premiums from finance charge Late Payment does not include simple interest accrual, but does include default rate Include both dollar/percentage and number of days (grace period) Construction Loan Redisclosure Notice new construction, expectation loan will close after 60 days: You may receive a revised Loan Estimate at any time prior to 60 days before consummation. Liability after Foreclosure (see page 56) Only for refinance transactions; not permitted for other transactions!! Warning that state law may remove protection against deficiency 50

51 ADDITIONAL INFORMATION Loan Acceptance signature optional Include acknowledgment of receipt/signature with you do not have to accept this... (see page 48); OR No signature: Loan Acceptance disclosure added to Other Considerations (see page 56) Transfer of Servicing (see page 48) 51

52 H-24(D) Mortgage Loan Transaction Loan Estimate - Refinance Sample- pg 1 52

58 CLOSING DISCLOSURE SCOPE Closed end consumer credit transactions secured by real property ACTUAL TERMS estimate using best information reasonably available in good faith using due diligence TIMING Creditor assures consumer receives no later than 3 business days before consummation (rescission def): HUGE CHANGE: THREE BUSINESS DAY WAITING PERIOD consummation defined by State law Can deliver in person, electronically, or by mail If sent by mail, deemed received 3 business days after sent (evidence of earlier receipt OK) Bona fide financial emergency process for waiver of waiting period (e.g. foreclosure sale) SETTLEMENT AGENT may deliver, can divide responsibility, but creditor ensures disclosures are delivered and comply More than one consumer: if rescindable, give to each; if not, may give to consumer with primary liability Rounding dollar amounts rounded to nearest whole dollar in general Percentage amounts not rounded, shown up to 2 or 3 decimals; if whole #, no decimals shown 58

59 CLOSING DISCLOSURE CHANGES BEFORE CONSUMMATION No new waiting period: redisclose at or before consummation; allow inspection 1 business day prior; EXCEPT Three business day waiting period for redisclosure if: APR becomes inaccurate ; (higher or lower?) Loan product changes Prepayment penalty added 59

60 CLOSING DISCLOSURE CHANGES AFTER CONSUMMATION: If during 30 day period post consummation: (i) an event connected to settlement causes a Closing Disclosure inaccuracy, and (ii) inaccuracy causes amount actually paid by consumer to change; then mail corrected disclosure within 30 days of receiving information about change. Recording fee change triggers 30 day disclosure Change that impacts what seller pays does not trigger disclosure to borrower; settlement agent must send revised disclosure to seller (nuisance abatement) Property tax increase not in connection with the settlement no redisclosure Changes due to clerical errors 60 days to redisclose Clerical error non-numerical: does not affect numerical disclosure nor timing or delivery Identify wrong settlement service provider clerical Lot wrong property address not clerical 60

61 CLOSING DISCLOSURE GOOD FAITH ANALYSIS REFUNDS w/in 60 DAYS If amount paid exceeds either the 10% threshold; or exceeds applicable prohibition on any change, safe harbor from liability arises if excess is refunded within 60 days after consummation accompanied by corrected Closing Disclosure. ACTUAL CHARGE/AVERAGE CHARGE Rule: Amount imposed on consumer not to exceed amount actually received by settlement service provider, except: Average Charge: May impose for a defined class of transactions uniformly to all, but not for insurance or any charge based on loan amount or property value. 61

62 CLOSING DISCLOSURE - SELLER Settlement agent to provide disclosures that relate to the seller s transaction no later than consummation. May provide copy of Closing Disclosure or separate short form: Appendix H-25(I) If during 30 day period post confirmation an event causes the disclosure to become inaccurate and results in a change to an amount paid by seller, settlement agent must provide corrected disclosures not later than 30 days after receiving information. Amount imposed on seller not to exceed amount actually received by settlement service provider except for the average cost option. Settlement agent to provide creditor a copy of seller disclosure. 62

63 CLOSING DISCLOSURE - Format Cannot use N/A or not applicable, just leave blank Adjustable payment and rate tables excluded if inapplicable Clear and conspicuous, segregated, form can keep Federally related mortgages use H-25; others, H-25 is a model Can print or fill out manually See Appendix H-28 for Spanish language 63

64 CLOSING DISCLOSURE Closing Information; Loan Information; Loan Terms (see p. 64 & 65) Settlement agent employer, not person conducting closing Sale Price becomes Appraised Prop. Value w/o seller Loan ID # must identify same transaction as Loan Estimate MIC # mortgage insurance case number Loan Terms same as Loan Estimate Projected Payments same as Loan Estimate Amount of estimated escrow payments accurate if any difference from Loan Estimate arises from RESPA escrow account analysis Costs at Closing alternative for transactions without a seller required if alternative used on Loan Estimate 64

65 H-25(B) Mortgage Loan Transaction Closing Disclosure - Fixed Rate Loan- pg 1 65

67 CLOSING COST DETAILS (see p. 68 & 69) Loan Originator Compensation either borrower paid, or if lender paid insert in paid by others ; Can insert L in front of number for lender Services Borrower Did NOT Shop For itemization of required settlement services could have but did not shop for. If provider on written list selected, list here. Services Borrower DID Shop For If consumer did NOT select a provider from written list of providers, list here. Loan Costs only borrower-paid costs are sub-totaled Initial Escrow Payment at Closing aggregate adjustment required by RESPA disclosed on last line (p. 68) property tax if separate for general and school, can show as 2 separate items Other owner s title shown as (optional) ; only borrower paid costs subtotaled. Add all additional costs incurred by borrower or seller that may not have appeared on Loan Estimate; i.e.: real estate broker fees, condo association fees paid at consummation, inspection fees. 67

68 CLOSING COST Total Closing Costs (see p. 69) Lender Credit generalized credit appears in column entitled Borrower Paid at Closing ; credits particular to a cost list in paid by others and (L) can be inserted Lender Credit show amount of credit to resolve excess charges above good faith fee limits: Appendix H-25(F): add excess statement : (includes $200 credit for increase in Closing Costs above legal limit) 68

71 CALCULATING CASH TO CLOSE Total Closing Costs (see p. 72) Total Closing Cost tell if changed and see details Bold face required for YES NO and other words in sample form Loan Estimate column: dollar amount is rounded, Final is shown to 2 decimals; but no increase solely due to rounding Total Closing Costs same figure as bottom of page 2 Total Closing Costs (Borrower-Paid) See details bold words; cross reference other sections Total Closing Costs if change, only cross reference Total Loan Costs or Total Other Costs or both as applicable Exceeding limits on increases in Total Closing Costs: Must calculate aggregate among various categories Sample: Increase exceeds legal limits by $200. See Lender Credits on page 2 for credit of excess amount. See Appendix H-25(F). 71

72 CALCULATING CASH TO CLOSE (see p. 72) Closing Costs Paid Before Closing Loan Estimate is 0 ; for Final, pull number in Borrower-Paid Before Closing from bottom of page 2. Closing Costs Financed if changes, show as a negative number, and state consumer included closing costs in the loan amount which increased the loan amount Down Payment If purchase price increases, down payment might increase. You increased this payment. See details in Section K. 72

74 CALCULATING CASH TO CLOSE NONPURCHASE (see p. 74) Alternative Closing Estimate table required if used Loan Estimate optional alternative table. Note Closing Costs Financed bottom of 3 rd column Loan Amount same as in Loan Terms on page 1 Total Closing Costs as negative number, from bottom page 2 If increase exceeds limit, disclose amount and cross reference Lender Credit Total Payoffs and Payments from page 3 chart Cash to Close to or from Borrower 74

75 CALCULATING CASH TO CLOSE - NONPURCHASE 75

76 SUMMARIES OF TRANSACTIONS Borrower s (see p. 78) For transactions without a seller, can substitute Payoffs and Payments ; Appendix H-25(J) see page 85 (when Alternative Cash to Close tables used too) Settlement Agent can work with creditor to disclose Due From Borrower: Outstanding real property taxes Due From Borrower: Adjustments - amounts owed such as rent collected after closing for periods before; tenant security deposit; Due From Borrower: Additional items paid by seller within time period Flood/hazard premiums PUD or condo assessments paid in advance Fuel or other supplies purchased by seller that consumer will use 76

77 SUMMARIES OF TRANSACTIONS Borrower s Paid By or On Behalf of Borrower: Seller credit (builder) is general credit Particular credits are disclosed in seller paid column Issues identified at walk-through prior to closing listed here Paid by or On Behalf of Borrower: Other Credits real estate agent rebate Describe name and party providing If attributable to a charge on page 2, list in paid by others Include amounts contributed by family member Paid By or On Behalf of Borrower: Subordinate financing proceeds Second Loan (Principal Balance $100,000) $96,500 Paid By or On Behalf of Borrower: Pay off of subordinate liens by consumer Satisfaction of Junior Lien $5,000 P.O.C. Borrower not included in calculations Paid By or On Behalf of Borrower: Other Credits : Gift funds show as credit & describe 77

78 SUMMARIES OF TRANSACTIONS Seller s Adjustments: Items paid by Seller in Advance Taxes paid in advance Flood premiums Mortgage Insurance Fuel/Supplies purchased by seller which consumer will use Due From Seller: Other Seller Obligations: list tax liens, judgments, other seller obligations to be paid from closing Seller Credit Funds to be held by closing agent for post closing invoices for repairs, utilities, or other costs that cannot be prorated because amounts unknown; subsequent disclosure after repair is optional 78

80 ADDITIONAL INFORMATION (see p. 80) Partial Payments accept, put in suspense, or not accept Security interest property address; zip code required; can add personal property description Escrow must disclose annual cost of non-escrowed property costs : taxes, insurance and assessments; also Escrow Waiver Fee Adjustable Payment Table/Adjustable Interest Rate Table disclosed here ONLY if applicable; same as Loan Estimate 80

82 OTHER DISCLOSURES (see p. 82) Liability After Foreclosure if state law provides protection from deficiency judgment liability, box gets checked. If no protection, other box checked. if any type of protection, check first box (state law protect) 82

84 CONTACT INFORMATION; SIGNATURE (see p. 84) CONTACT INFO: Column left blank if no such party to the transaction; unless multiple other parties and room is needed SIGNATURE: Optional; same guidance as Loan Estimate 84

86 86

87 SPECIAL INFORMATION BOOKLET Scope purchase money real property secured loans Excluded - refinances, HELOC s (delivery of separate HELOC booklet deemed compliance), subordinate lien Timing not later than 3 business days after application is received (days open for business) Mortgage broker may provide instead of creditor New Booklet Released by CFPB click to view the new booklet 87

88 RECORD RETENTION 3 YEARS For evidence of compliance with the Loan Estimate and Closing Disclosure process Runs from the later of consummation, date disclosure is required, or date action is required to be taken. 5 YEARS Retain each completed Closing Disclosure (including seller disclosure) Transfer of servicing creditor provides to new owner or servicer a copy of the Closing Disclosures, and such new owner or servicer retains for balance of the 5 years. 88

89 PENALTIES TILA Private Action for any violation in entire rule?? Admin Enforcement; CFPB and other agencies AG s and States Examinations 89

90 CFPB RESOURCES 90

91 Leonard A. Bernstein Philadelphia, PA Len is the managing partner of Reed Smith s Philadelphia office. Len founded and chairs the firm's Financial Services Regulatory Group ( FSRG ) and concentrates his practice in the representation of banks, mortgage bankers and finance companies in providing consumer credit compliance advice on federal, Pennsylvania and New Jersey laws and regulations. The FSRG addresses credit card, auto finance, deposit, residential mortgage and other retail finance products. Len is nationally known for expertise with federal Truth-in-Lending Act, Real Estate Settlement Procedures Act and similar laws, and works regularly with federal and state financial services regulators. Len and his colleagues also handle bank regulatory issues and exams, and defend class actions and individual claims filed against financial services providers. Len is also active with the firm's Financial Services Litigation defense group and has been elected to the American College of Consumer Financial Services Attorneys. 91